After two and half hours of formulating responses to a long-awaited audit, Effingham County commission Chairman Wendall Kessler said he did not see anything that could be a material finding.
There were 38 findings from the auditor, Donald Caines of Rincon accounting firm Caines and Hodges, and 25 of them dealt with items under the commissioners’ ultimate control. Two of those were about the Keep Effingham Beautiful account, and commissioners have asked the firm conducting the county’s audit to look into those items.
“Probably none of these are going to be material findings,” Kessler said. “I don’t see anything that can be a material finding.”
Many of the findings had to do with a lack of segregation of duties and possible violations of the county’s grant policy. There also were issues with grants and transactions with parties related to commissioners.
Commissioner Steve Mason inquired about the findings, some of which had to do with policies and procedures.
“What is different about this year?” he asked. “If this has been something that has been going on for years, why is it showing up in an audit this year? Either this one is accurate, or the last two or three audits I have looked at are wrong.
“There are findings in this year’s audit that wasn’t in last year’s and business has been handled the same as last year. So which is right?”
Kessler pointed out his own accountant, who performs government audits, said a three-year rotation of criteria is used in audits.
“So they never know what they’re coming in to look for,” he said.
Finance director Joanna Wright explained they also look through minutes, newspaper articles and notes.
“There is a host of areas and they do tend to change their audit program every two to three years,” she said.
Commissioner Vera Jones said many of the findings referred to how grants were handled in the previous year.
The auditor also said the county administrator was included on signature cards for the Senior Citizens Activities Program and the landfill accounts. Wright said she did not think that having those signatures on the cards led to any money being misspent or misappropriated.
The issue of new signature cards at the start of the year rectified the situation. The auditor recommended the board’s policy requiring all authorized signatures to be approved by the commissioners and have an independent party review signature cards periodically.
The findings also called for a segregation of duties in several areas, including having the person who prepares and mails invoices not also being the same person who receives payments for those invoices.
Budget cuts and a lack of personnel has meant that some county employees are taking on responsibilities in addition to their present duties.
Kessler said that is probably true, but if it is a control problem, the commissioners need to address it.
“We are fortunate to have staff that has been helpful to staff and to other elected officials,” he said.
“This is about safeguarding, as much as we can, the assets of the county,” Wright said. “We need to look at each area that receives funds and what is reasonable and what can be done that the control of the invoice and the funds received are designed in such a way that one person does not have custody.”
The auditor reported that the purchasing policy does not effectively describe where invoices should go when received. Wright said normally the invoices come through purchasing or the finance office. The auditor recommended revising the purchasing policy to stipulate the flow of documents related to purchasing.
Issues with grants and related parties
The county’s grant process also was called into question, with the auditor declaring there appeared to be a “pervasive pattern of violations of the grant policy” and the finance director was not included or involved in important parts of the applications and agreements for many grants.
According to the county’s grant policy, the documentation on grants presented to the commissioners for approval must be submitted to the finance director at least three working days prior to the agenda deadline for that commissioners’ meeting, allowing the finance director time to determine if the county can administer the grant.
“A lot of these grants are matching grants,” Kessler said.
As part of their response, the commissioners agreed to request the county administrator and finance director sign presentation documents to indicate their review.
“We have to extend funds prior to getting reimbursement. To me, that needs to be a board direction,” Wright said. “There are a host of items that are supposed to occur before (a grant) comes before the board. It gives us the guidelines of how we do business. It gives us the guidelines and guardrails of how we proceed with these different grants. There is a host of rules and regulations we have to follow.”
The auditor also said grant policy was violated, if not completely ignored, in regards to a potential grant with a party related to a commissioner, with no public disclosure and whether it was disclosed to other commissioners in executive session.
“This has been the subject of a lot of debate and a lot of issues,” Kessler said.
Commissioners also will develop procedures to comply with state law and to insure transparency regarding each transaction. When related party transactions exist, commissioners will be informed in writing, and agenda documents will include the representations for public knowledge and transparency. A list of potential related parties and entities will be drawn up so that county staff is aware of possible related parties.
The county also lost its qualified local government status, and the commissioners were not notified. The loss of qualified local government status was associated with its capital improvement element and short term work program. Both items had been submitted to the Coastal Regional Commission for approval.
“Internal documents show that it was known by staff members that they lost it,” Jones said.
The loss of qualified government status means there are some grants for which the county would not be eligible. It also restricts the county’s ability to collect impact fees. County commissioners restructured impact fees in April 2011, including eliminating the charges for roads, recreation and public safety and restructuring the water, sewer and reuse water fees.
Questions about what the audit covered
While commissioners opted not to delve into the two findings on the Keep Effingham Beautiful account, Jones asked why the sanitation department, which falls under the commissioners’ control, had a separate post office box. Kessler added there needs to be one mailing address for the departments controlled by the commissioners.
“If it has to do with county business, it needs to come to that address,” Kessler said.
Audit findings also said the commissioners’ meeting agenda policy is not consistently enforced, with items added to the agenda but their related documents not being submitted until after the deadline for items to be placed on the upcoming agenda.
“Why is something like this on the audit?” asked Mason.
Wright said it could be because of policy and procedure, and Jones said it may have to do with having agenda items placed at the last minute that could have to do with financial concerns.
The audit findings also called into question the relationship between former county administrator David Crawley and former county clerk Patrice Crawley, who are married to each other.
“Why was this in the audit to start with?” Commissioner Reggie Loper inquired.
“That’s a very good question,” Mason said. “It’s another item that for five years was not in an audit, and there was no real answer for that. The only answer was that there was a different set of eyes looking at that.”
Forrest Floyd said it was a conflict of interest and it could be related to the Keep Effingham Beautiful account.
“It is a problem,” Jones said. “Our employment policy does not allow that currently. In my opinion, if past boards had dealt with some things along the way, we wouldn’t be in the scenario we’re in today.”
The audit also said a proposed lease did not disclose all the information needed to make an informed decision. The lease at issue was for the 150th commemoration of the Civil War at Camp Davis, which is now on private property, and the request to help the public traffic get to the site.
“But the county had nothing to do with that. The county had no money involved in that whatsoever,” Loper said.
Jones said this was an important example of some of the issues.
“What was on the staff report said it was to improve an entrance,” she said. “I was able to ascertain we were talking about building a road and I actually said, ‘are we talking about building a road?’ And the answer was yes.”
Jones said David Crawley replied he didn’t know how much it would take to perform the work.
“We chose not to do the road, but had we voted the way it was presented, we would have hauled dirt and laid pipe and we would have paid the cost for that,” she said.